Frontier Insights

Follow me for insights about business models, innovation arbitrage, technology, investing, and holding companies.

[Frontier Insights @FrontInsights]

1/ Are you a fan of Mark Leonard, the legendary founder of serial acquirer Constellation Software?

Then you’re going to want to learn about a man Mark Leonard greatly admired and one of the companies he modeled Constellation Software after.

Who? 🤔

You’ll find out below 👇

[Frontier Insights @FrontInsights]

@JamieHalse Did a thread on Shunsaku Sagami and M&A Research Institute

[Frontier Insights @FrontInsights]

@thomasince Do you have a link to the video? Also have this framework of thinking, great to see how he summarizes it

[Frontier Insights @FrontInsights]

Thanks for the response! Agree that it is a vastly better business than incumbents in the market, and they likely have better operating leverage because they do not need to hire as many staff for sourcing/deal execution, but not sure if its worth the premium. They will also have to reinvest a lot of cash into R&D in order to maintain their technological moat.

[Frontier Insights @FrontInsights]

I'm fascinated by small business buyouts.

So when I learned about M&A Research Institute in Japan -a business brokerage utilizing AI to matchmake small businesses to buyers in Japan - I was an instant fan.

That being said, the company is horrendously overvalued right now.

[Frontier Insights @FrontInsights]

I still think it's a great company, just that with the recent Japan stock boom, prices are a bit out of whack.

Anyone buying $TYO9552 now might be losing their shirt. Buyer beware!

[Frontier Insights @FrontInsights]

I think Shunsaku agrees the company is overvalued🤔

He's selling off 1.6 million shares in a secondary offering to overseas markets. At 11,150 Yen per share, that's 17.84 Billion Yen ($124.5 Million) he's taking off the table.

[Frontier Insights @FrontInsights]

The private equity market in Asia is nowhere near as robust as the US or EU.

China's PE industry is already sizable, and Japan's is likely the most mature in Asia.

The story in Vietnam, Indonesia, Phillipines is just getting started.

But it's a thesis, not validated yet.

[Frontier Insights @FrontInsights]

My thesis is that there is a significant opportunity to acquire SMEs in Southeast Asia

Why?

1) Less competition for deals (few PE funds)
2) Fragmentation/opacity of market vs the west
3) Less sophisticated sellers (lower valuation + opportunity to add value

[Frontier Insights @FrontInsights]

Solution:
1) Long term hold co, so structurally no need to sell biz
2) Invest to understand local culture and nuances
3) Invest in biz with high potential for organic growth and value add (possible when there's market fragmentation)

[Frontier Insights @FrontInsights]

I'm still searching for answers: to start and run a business my way and style.

I guess that's why I made this account.

[Frontier Insights @FrontInsights]

I've been deep-diving various long-term holding companies over the last year.

Don't get me wrong, I love venture capital and innovation (I come from a venture background!)

But I think given my personality, I want a way to predictably compound wealth

[Frontier Insights @FrontInsights]

There's a sense of permanence and structure that these companies have that I think resonates deeply within me.

I've been searching for a way to marry serial acquisitions with innovative approaches.